My friend and business associate Brian Preston compiles this monthly report on Edmond homes sales. November 2011 home sales were exactly the same as November 2010, although overall 2011 homes sales are up 6%. The interesting part is that listing inventory is down once again. What this may portend is an increase in sales price, since anytime demand increases and inventory decreases, home values tend to rise. I’ve seen this evident especially in appraisals recently.
I am currently working a transaction on a 3 bedroom log home on an acreage in which the appraisal came in at $8,000 under sales price. We had analyzed data on this unique property and knew the appraisal would be sketchy. Knowing that we did not want to risk losing this property to another buyer, my buyer agreed to the demands of the seller with the understanding that everything hinged on the appraisal. Lenders aren’t’ willing to finance properties for more than the property is worth! Now that the appraised value is determined, we negotiated with the seller to reduce the sales price accordingly.
Although buyers are willing to pay a fair price for the property they want, the appraisals have not caught up yet since those values are determined through past sales, not necessarily current value. It’s still going to take another year or more for the market to adjust to the soft economy.